bank talks delay b&b rescue plan

Bank talks delay B&B rescue plan

Danny John
January 7, 2009
TALKS to come up with an acceptable restructuring blueprint that will provide a long-term future for the troubled investment group Babcock & Brown are set to go on longer than planned, it emerged yesterday.

Babcock & Brown, struggling to pay back $3 billion to its lenders, had initially indicated it hoped to have its new business plan, involving a debt-for-equity swap, in place by the end of this week.

But the group, which was thrown a short-term funding lifeline of $150 million four weeks ago, said in a statement to the Australian Securities Exchange that a response from its banking syndicate, which needs to approve the plan, would take at least until Monday to secure.

The latest delay emerged in Babcock & Brown's response to a query from the exchange over a sudden sharp rise in its share price over the past five trading days. The stock has more than doubled from 15c on December 30 to its closing price yesterday of 38.5c.

The volume of stock traded also shot up, with more than 47 million shares changing hands yesterday as the shares put on 13.5c of their most recent rise, an increase of 54 per cent in the day's session.

Babcock & Brown told the ASX it was not aware of any information that would explain its soaring price, although the company pointed to its public statement on December 4 in which it referred to the January 9 deadline.

The company also reiterated its warning that any acceptance by the banks to swap part of the debt for shares would "significantly reduce" the value of any equity owned by shareholders.


http://business.smh.com.au/business/bank-talks-delay-bampb-rescue-plan-20090106-7b57.html